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At a Florida rental car agency, students assume the role of a district manager responsible for setting prices for rental cars across three Florida cities: Miami, Orlando, and Tampa. Over 12 simulated months, students must analyze price sensitivity between leisure and business travelers and consider strategies that maximize rentals across weekdays and weekends in each city. Demand for rental cars can vary depending on the month and whether the location is more popular with business or leisure travelers. Unrented cars have associated holding costs while running out of cars is lost opportunity for profit. Students can make periodic inventory adjustments among the locations to match anticipated demand. The market for rental cars in Florida is intensely competitive and students must also consider the likely competitive response to their pricing decisions. Ultimately, students must analyze the economic, seasonal, and competitive forces of the rental car market and develop a pricing strategy to maximize the cumulative profit for the firm. Students benefit from running the simulation multiple times with increasing complexity. This single-player simulation includes three pre-set scenarios or faculty can design custom scenarios to meet specific learning objectives

The second release of this popular simulation retains the immersive experience of the original while streamlining the information available to students and the debrief tools for faculty.

learning objective:

Understand the nature and dynamics of consumer response to price (price elasticity). Account for demand differences across customer segments and regions. Understand and plan for seasonal variations in demand. Explore the impact of pricing decisions on firm profitability. Use pricing strategies to optimize inventory. Anticipate and understand competitive reactions to pricing decisions. Understand how price and general economic conditions affect overall market demand.

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It is early 1998 and Biopure Corp., a small biopharmaceutical firm with no sales revenues in its ten-year history, has just received government approval to release Oxyglobin, a revolutionary new "blood substitute" designed to replace the need for donated animal blood in the veterinary market. A virtually identical product for the human market, Hemopure, is in the final stages of testing by Biopure and is expected to gain approval within one to two years. In response to the timing of approval for these two products, there has been a long-running debate within Biopure as how to proceed with Oxyglobin. At odds are those in charge of Oxyglobin, who want to see the animal product released immediately, and those in charge of the Hemopure, who worry that an immediate release of Oxyglobin would create an unrealistically low price expectation for what they feel should be a very high-margin human product. Exacerbating the problem is the nature of the biopharmaceutical industry, where product approval is never a certainty until achieved.

learning objective:

To introduce the concepts of market segmentation, product line policy, and multi-product pricing. Also introduces students to the unique business dynamics of the biotechnology industry.

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This Core Curriculum Reading introduces students to the fundamentals of getting price right. First, it introduces value pricing, which requires a detailed understanding of the true economic value (TEV) that a firm's product creates for a specific customer. Value pricing also requires a decision to divide that value between the firm (providing the firm its incentive to sell) and the customer (providing the customer with an incentive to buy). After covering the key elements of the value-pricing approach, the Reading explains the concepts of price customization, consumer sensitivity to price, and the impact of price on the organization's profitability. Students also learn how both quantitative research and managerial judgment are used to make optimal pricing decisions. Review Questions and Exhibit Slides are available in the Supplemental Materials tab.

The Reading includes three Interactive Illustrations: "The Value-Pricing Thermometer," which helps students explore how the setting of a product's price affects the allocation of value between a customer and the firm; "Breakeven Analysis," which helps students understand the output required to fully cover the fixed and variable costs in various scenarios, and the impact on company revenues and profits; and "Marginal Math," which helps students understand marginal math and the interplay among price, margin, unit sales, and price elasticity in low-margin and high-margin settings.

learning objective:

1. To highlight the importance of "getting pricing right." 2. To explain the value-based approach to pricing and the key inputs to the value-pricing decision. 3. To discuss the concept and role of price customization. 4. To explain price sensitivity as the fundamental consumer-side consideration in the pricing decision. 5. To explain the drivers of profitability and the key measures of pricing's economic impact on the firm.

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"Consumer Behavior and the Buying Process" describes and analyzes 4 frameworks for understanding how consumers make decisions: cognitive versus emotional, high-involvement versus low-involvement, optimizing versus "satisficing," and compensatory versus noncompensatory decision making. This Core Curriculum Reading then presents the activities that occur during the 3 phases in the consumer buying process: pre-purchase, purchase, and post-purchase. It also analyzes consumer decision-making units, including roles played within such units, such as buyer, influencer, gatekeeper, and approver. The Reading includes an in-depth example of how a pharmaceutical company analyzed decision-making processes and decision-making units to develop marketing campaigns for a new product. It concludes with an exploration of 3 developments that profoundly affect consumers' decision-making process and units: social media, co-creation and customer involvement, and "conscience" marketing. Ultimately, this Reading prepares students to become marketers who can design effective advertising and marketing campaigns for products and services.

The Reading also includes links to 3 videos: "United Breaks Guitars," "Use Social Media to Listen to Customers," and "Harnessing Creativity." Review Questions and Exhibit Slides are available in the Supplemental Materials tab.

learning objective:

1. Describe and analyze 4 frameworks for understanding how consumers make decisions. 2. Explain the activities in which consumers engage during the 3 phases of the buying process: pre-purchase, purchase, and post-purchase. 3. Identify what a decision-making unit is and describe several roles often played within decision-making units. 4. Analyze a case study to identify how the featured organization used insights about the consumer decision-making process and decision-making units to design a marketing campaign for a new product. 5. Examine how social media, co-creation and customer involvement, and "conscience" marketing are reshaping consumers' decision-making process and decision-making units, and analyze these developments' implications for marketers.

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Many companies are in competition with their customers to extract as much value as possible from every transaction. Pricing is their weapon of choice, and consumers fight back by rooting out and disseminating pricing policies that seem unfair. The problem is that companies generally think of value as a pie that is rightfully theirs. But value is not fixed, and it neither originates with nor belongs solely to the firm. Without a willing customer, there is no value. Instead of using pricing in a way that turns customers into adversaries, companies can use it to enlarge the pie. That means viewing customers as partners in value creation--a collaboration that increases customers' engagement and taps their insights about the value they seek and how firms could deliver it. The result can be new revenue, increased customer satisfaction and loyalty, positive word of mouth, and cost savings. The multiyear process to price the 8 million tickets to the upcoming London 2012 Olympic Games suggests five principles for using pricing to create shared value: Focus on relationships, not on transactions, by using pricing to communicate that you value customers as people; set prices proactively to discourage detrimental behavior and to encourage behavior that is beneficial to both your firm and your customers; allow prices to change in response to shifting customer needs; promote transparency by providing the rationale for your pricing; and make sure that prices and the processes by which they are set meet consumers' expectations about what is fair.

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An updated "Four Products" case. This 2011 version includes; sliced peanut butter, artificial dirt for thoroughbred race tracks, interactive tombstones, and stride-changing running shoes. These four products form the basis to assess the drivers of new product adoption. In particular, one of the critical tasks in marketing new innovations is predicting demand and rates of diffusion for those products. And while one can speculate on the scope and rate of diffusion for any given product, it's helpful to compare and contrast diffusion across products. Doing so allows one to focus on the drivers or product characteristics that influence product diffusion, making one product a star and another a dog. Specifically, looking across products allows one to pick up on things that get lost in discussing a single product. Note that this case often gets used with HBS No. 505-075, "Note on Innovation Diffusion; Rogers' Five Factors," which can be distributed along with the case or after the case has been taught.

learning objective:

To identify the attributes of products that help or hinder product demand and diffusion; to decide why Product A will diffuse more rapidly than Product B; and to identify and discuss those factors that drive product diffusion across time and people.

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For teaching purposes, this is the commentary-only version of the HBR case study. The case-only version is reprint R1106X. The complete case study and commentary is reprint R1106M.

Alegre, a leading hotel group in Central and South America, is suffering under the troubled economy, and its newest property, the flagship Palma Cay in Cozumel, is hurting most. Beatriz Soto, Palma Cay's manager, has a plan to boost bookings, but she doesn't have the money to carry it out. Should corporate headquarters grant her additional funds, despite the company's traditionally decentralized operations? Or should Alegre think about launching its very first portfolio-wide campaign? With commentary by Raul Gonzalez, the CEO of Barcelo Hotels & Resorts for Europe, the Middle East, and Africa; and Kevin Lane Keller, the E.B. Osborn Professor of Marketing at Dartmouth's Tuck School of Business.

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This HBR Case Study includes both the case and the commentary. For teaching purposes, this reprint is also available in two other versions: case study-only, reprint R1106X, and commentary-only, R1106Z.

Alegre, a leading hotel group in Central and South America, is suffering under the troubled economy, and its newest property, the flagship Palma Cay in Cozumel, is hurting most. Beatriz Soto, Palma Cay's manager, has a plan to boost bookings, but she doesn't have the money to carry it out. Should corporate headquarters grant her additional funds, despite the company's traditionally decentralized operations? Or should Alegre think about launching its very first portfolio-wide campaign? With commentary by Raul Gonzalez, the CEO of Barcelo Hotels & Resorts for Europe, the Middle East, and Africa; and Kevin Lane Keller, the E.B. Osborn Professor of Marketing at Dartmouth's Tuck School of Business.

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For teaching purposes, this is the case-only version of the HBR case study. The commentary-only version is reprint R1106Z. The complete case study and commentary is reprint R1106M.

Alegre, a leading hotel group in Central and South America, is suffering under the troubled economy, and its newest property, the flagship Palma Cay in Cozumel, is hurting most. Beatriz Soto, Palma Cay's manager, has a plan to boost bookings, but she doesn't have the money to carry it out. Should corporate headquarters grant her additional funds, despite the company's traditionally decentralized operations? Or should Alegre think about launching its very first portfolio-wide campaign? With commentary by Raul Gonzalez, the CEO of Barcelo Hotels & Resorts for Europe, the Middle East, and Africa; and Kevin Lane Keller, the E.B. Osborn Professor of Marketing at Dartmouth's Tuck School of Business.

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